Bitcoin has long been scrutinized for the benefits and risks it poses to economic growth, financial system stability, and societal welfare. While some consider it the most significant financial innovation of the fourth industrial revolution, others believe it should be outright prohibited.
Cryptocurrency outlawed? Really?
In a recent interview with Fox News, investor Brock Pierce responded to the same crypto-critics. In the context of cryptocurrency prohibition, he stated,
“I’m not sure how anyone could do that.” It is logically a distributed decentralized network.”
He compared cryptocurrency to the industrial revolution, claiming that jurisdictions can only outlaw it, as China has. As a result, there will be only a list of winners and losers.
“The question is whether you will benefit from change or not…”
What kind of rules does the industry require?
Given the regulatory uncertainty in the United States, Pierce hopes that the government “makes wise, sensible decisions” based on “research.” It’s worth noting that Pierce is a co-founder of Tether, the stablecoin that was recently flagged by the US Treasury Department.
Having said that, experts argue that the United States requires a clear regulatory framework. Rodgin Cohen, Senior Chairman of Sullivan & Cromwell, recently listed key regulatory changes required in the United States. He stated in an interview with Bloomberg,
“The Community Reinvestment Act must be modernized” (CRA). Basel III requires final capital rules. “At the very least, we need to start a real debate about a central bank digital currency (CBDC).”
He went on to say, “It’s time for a clear regulatory approach to cryptocurrencies.”
“A number of safety and soundness regulations are required.” “Very modernized.”
While the need for and level of crypto-regulations is a hotly debated topic around the world, El Salvador’s Bitcoin adoption is also a hotly debated topic. In a panel discussion, Pierce praised El Salvador’s Bitcoin decision. He stated,
“The results are incredible. They outperformed my highest expectations.”
He also stated that within a month of going live, more than half of the country’s population had downloaded a Bitcoin wallet. Furthermore, he emphasized that it is a country where 70% of the population is unbanked. While he associated the policy decision with accelerating innovation and financial inclusion, it appears that not everyone agrees.
Is it all a bunch of smoke and mirrors?
Moving on to technology, economist Steve Hanke recently called most of the crypto-innovation going on around us “smoke and mirrors.”
Private, digital money is nothing new. Most money has been produced privately and in a digital form for decades. A great deal of what you read about the innovative wonders of cryptocurrencies is smoke and mirrors. Read my latest:https://t.co/hRwEUiBOQy— Steve Hanke (@steve_hanke) October 13, 2021
Economists Hanke and Matt Sekerke questioned the need for cryptocurrency in a co-authored article. Furthermore, they stated that “banks have been trustworthy keepers of ledgers for centuries.” They continued,
“We do not wish to claim that crypto is devoid of innovation, but rather to scale back some of the more exaggerated claims about it.”
Jamie Dimon, CEO of JP Morgan Chase, recently stated that Bitcoin is “worthless.” However, as discussions about the need for investor protection and innovation protection continue, institutional adoption of cryptocurrency has also accelerated as a result of investor interest. This was also mentioned by Brock Pierce.
Pierce responded to Dimon’s remark by saying,
“When you look deeper, his firm is involved in and profiting from this [crypto], and they have a lot of engineers working on it…”